How can power of attorney affect business partners?
It is often suggested that you shouldn’t mix business with pleasure but for some individuals this simply isn’t possible. Those starting their own business often do so with someone they know – a friend or relative, spouse or partner. In these situations, plenty of things need to be considered in order to protect both the personal and professional relationships.
The division of company assets and management control is perhaps the biggest consideration and closely related to this are legal considerations surrounding what would happen if one of the partners was to lose their life or become physically or mentally dependent on others. Power of attorney grants a nominated individual complete power over the finances of their dependant or deceased family member and this will naturally have a profound impact on their connections or involvement with a business or company.
Who can be granted power of attorney?
In theory anyone can be, but more often than not it comes down to the next of kin who is the legal successor or beneficiary. In situations where the next of kin is unwilling or unable, a further form can be filed with local councils which grants an elected individual the right to act on the behalf of the next of kin. For those entering business together, the business partner may be nominated as the representative but some may prefer to choose an impartial third party instead.
How will it affect work?
Power of attorney is a simple process and the only thing that may take time is the filing of specific forms which you will be sent and told what to do. For those undergoing this process whilst trying to run a business, there should be minimal changes to your working life.
What will affect work more is what happens to the shares the deceased or disabled individual owned in the company. These are usually passed on to a beneficiary much in the same way other assets are divided but the other business partner may want to make a bid to buy the stakes off of the inheritor. This will be down to individual negotiation and in some instances partners may be happy to have a new person on board.
If the inheritor does not want involvement with the company then they can choose to sell their shares separately. This is most commonly done when the surviving original business partner lacks the necessary funds to buy the shares and can lead to a difficult period of adjustment.